web analytics
September 20, 2014 / 25 Elul, 5774
At a Glance
Blogs
Sponsored Post
Apartment 758x530 Africa-Israel at the Israel Real Estate Exhibition in New York

Africa Israel Residences, part of the Africa Israel Investments Group led by international businessman Lev Leviev, will present 7 leading projects on the The Israel Real Estate Exhibition in New York on Sep 14-15, 2014.



The Secret to Buying the Right Stocks

Goldstein

What kind of investor do you think you are? Do you try to time the market and jump in at the right minute? Or are you a more cautious kind of person who spends hours researching market performance before you consider buying or selling anything?

In fact, it doesn’t really matter what kind of investor you think you are. The results of your efforts are translated into the profits and losses that appear in your portfolio. Therefore, even if you feel very confident and have a great feeling about a particular stock that everyone’s talking about, when push comes to shove, your emotions make very little difference. Actual market performance is, at the end of the day, what counts.

For many years, investors have always wanted to know what the true secret is to buying the right stocks. From the South Sea Bubble to the Great Depression, there are those who fell by the wayside when everything went wrong, while on the other hand, there were those who made the right moves and ended up living in luxury. So, what is it that helps some people get it right, while others don’t? Is there any real basis for investing by following your gut feelings? And, if the famous disclaimer, “past performance is no indication of future returns,” is actually true, what is the point of all of the research out there into markets, stocks, performance, etc. anyway? Perhaps the whole thing is one great gamble.

These questions, of why people invest the way they do, have occupied researchers in recent years, giving rise to the science of behavioral investing. One such researcher, Professor Terrance Odean of the University of California (Berkeley), studied the behavior of investors and reached the conclusion that “the average investor is his own worst enemy.”

According to Professor Odean, “the average investor is better off not trying to time the market.” From his research, he has found that individuals tend to get market timing and behavior wrong more often than institutional investors. There can be many reasons for this. For example, an individual is more likely to be driven by emotions such as fear or regret, whereas an institution is less likely to be driven by emotion. Secondly, as Professor Odean points out, “there are times when institutional investors know things that individuals don’t know, so they have an informational advantage or ability to process publicly available information in a better way.”

Based on Professor Odean’s research, the most efficient way to buy stocks may be to use the services of a money manager. Professional money managers hopefully won’t be blinded by emotion when making investment decisions (after all it’s their job!) and have more access to the right information than the average investor.

If you want to find out more about the theories of behavioral investing, watch a video of my interview with Professor Odean, which took place on the Goldstein on Gelt radio show.

About the Author: Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd, a financial planning and investment services firm located in Jerusalem. He specializes in working with clients who live outside of the United States and want to maintain a U.S. brokerage account. Doug’s newest book, co-authored with Susan Polgar, about how using chess strategies to improve your finances, Rich As A King can be purchased at www.richasaking.com. He is a licensed financial professional both in the U.S. and Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, SIFMA, FSI. Accounts held at Pershing LLC., Member NYSE/SIPC, a subsidiary of The Bank of New York Mellon Corporation. Neither Profile nor PRG gives tax or legal advice. Before immigrating to Israel, it is advisable to consult with a tax attorney who is knowledgeable about Israeli law. Contact at doug@profile-financial.com


If you don't see your comment after publishing it, refresh the page.

Our comments section is intended for meaningful responses and debates in a civilized manner. We ask that you respect the fact that we are a religious Jewish website and avoid inappropriate language at all cost.

If you promote any foreign religions, gods or messiahs, lies about Israel, anti-Semitism, or advocate violence (except against terrorists), your permission to comment may be revoked.

No Responses to “The Secret to Buying the Right Stocks”

Comments are closed.

SocialTwist Tell-a-Friend

Current Top Story
Aircraft carrier USS Carl Vinson in the Persian Gulf, March 9, 2012, deployed with Carrier Air Wing 17 to the U.S. 5th Fleet area of responsibility.  (illustrative only)
First Time: Iran, China Begin Joint Naval Drills
Latest Blogs Stories
Doug Goldstein

Why some countries are more economically successful than others? Tune in for the answer…

ethics

If not scared by God be scared by man; Hopefully ethics will integrate into lives for proper reasons

rgds

Smear campaigns by people with agendas other than justice do not faze him; He does what is right.

Even Muslims -- including a number of groups one might consider to be quite radical -- are distancing themselves from ISIS and declaring the group to be apostate.

Countries like Turkey, Europe and even the US have proven fertile ground for recruiting terrorists

How many times have you heard anti-semites spew words like Israel are Nazis, or what you are doing to the Arabs is worse that what the Nazis did to the Jews?!…

My blog, Israpundit, was hacked, and I had to move to a new domain…

There’s much confusion about the definition of Daas Torah; simply put it means the wisdom of Torah.

We’ll never be able to negotiate a true, lasting peace with the Arabs.Their aim is our destruction.

Now I live in a country where every shop in the food court is kosher! I can have anything I want!

Pashkevil: “Come out today and battle the Zionist Amalek and all the traitors in Nahal Haredi…”

Jordan: Only M.E. country with no historical basis and ruled by occupiers placed by European powers.

Why is an IRA a worthwhile account for retirement? And how can you use it to the best advantage?

Like the fighter pilot’s letter, I wonder if certain units are simply too sensitive to allow certain leftwingers to serve in, and to entrust in their hands the security of our country and our lives.

There is only one thing more tragic than experiencing a terror attack, and that is allowing those who attacked you to do it again!

Smuggling Gazans into Europe is cheaper than fighting with Gaza, and then rebuilding all the destruction.

This week’s parsha offers a new covenant; a covenant that speaks to national life unlike any other

More Articles from Doug Goldstein, CFP®
Doug Goldstein

Why some countries are more economically successful than others? Tune in for the answer…

Doug Goldstein

Why is an IRA a worthwhile account for retirement? And how can you use it to the best advantage?

How do you reach the top of your profession, and are you always aware of your own talents?

How has the sudden growth in modern technology affected world economy and future employment levels?

Learn about Monte Carlo-not the place but simulator forbuilding a financial plan.

This week’s podcast discusses the need for transparency in international business dealings.

Life after 50? You better believe it! Tips on how to prepare and enjoy life after retirement.

Marriage is not just about emotional fidelity but about financial fidelity as well.

Printed from: http://www.jewishpress.com/blogs/goldstein-on-gelt/the-secret-to-buying-the-right-stocks/2012/07/04/

Scan this QR code to visit this page online: